Google travel bid hits turbulence

Google is making a play for your travel dollars, but first it has to clear security.

The search giant is looking to break into the travel business and compete with Orbitz, CheapTickets, Travelocity and the like. To do it, Google is trying to purchase ITA Software, a company that provides the back-end flight search capabilities to many of those sites.

Story Continued Below

But Google first must persuade Washington regulators to approve the $700 million deal, a feat nearly as difficult as connecting through O'Hare Airport on Thanksgiving weekend.

The proposal is another example of Google moving into business “verticals,” similar to its move into indexing digital books or building wireless operating systems, said Rebecca Arbogast, managing director of investment bank Stifel Nicolaus.

“This increases the anxiety level of the new set of companies that must now compete against Google, but it generally doesn't trigger government action, and I'd be surprised if DoJ blocks this deal,” she told POLITICO.

That isn't to say Google's potential competitors aren't trying. Expedia started by hiring Thomas Barnett, who led the Justice Department's antitrust division during the George W. Bush administration, to explain the dangers of the merger to federal antitrust regulators.

Barnett has long attacked what he sees as Google’s growing dominance. In 2008, he blocked Google’s advertising deal with Yahoo, which later fell apart.

Expedia, Hotwire, Farelogic and Kayak also launched the " FairSearch.org" coalition to oppose the deal. The coalition has sent letters to lawmakers and bought media ad space in several publications, including POLITICO.

“The majority of online travel sites depend on ITA to execute flight searches,” Barnett said in an interview. “Google will have the incentive and ability to dominate the online travel search space in a way that will make it harder to find lower fares, that will make advertising and other costs increase.”

ITA is a key player in the travel industry, though few consumers know it exists. The 500-person company provides online air-travel bookings for a number of travel search websites such as Orbitz and Hotwire, as well as 65 percent of the online ticket sales for major airlines including Southwest, Continental and US Airways.

Page:

CORRECTION: Corrected by: Alex Byers @ 11/27/2010 12:17 PM
Correction: A previous version of this story misstated the size of ITA's role in flight ticket sales through online travel sites.
MADE BY BYERS at 1216p on 1127 per Hart